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Indequity Interim Results for the six months ended 31 March 2018
Indequity Group Limited
Registration number: 1998/015883/06
Incorporated in the Republic of South Africa
“Indequity” or “the Group” or “the Company”
Share code: IDQ
ISIN: ZAE000016606
INDEQUITY INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2018
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION
31-Mar-2018 31-Mar-2017 30-Sep-2017
Unaudited Unaudited Audited
R'000 R'000 R'000
ASSETS
Property and equipment 2 126 2 150 2 058
Intangible assets 809 859 825
Subrogation and salvage recoveries 2 061 2 449 2 095
Reinsurance portion of insurance contract
38 84 42
provisions
Investments 6 443 24 506 3 985
Deferred tax asset 303 106 250
Loans and receivables 413 319 145
Normal tax receivable - 11 -
Cash and cash equivalents 33 145 24 797 45 781
Total Assets 45 338 55 281 55 181
EQUITY
Capital and reserve attributed to the company's equity
holders
Share capital 21 25 25
Share premium 17 036 28 101 23 268
Retained income 25 500 21 047 24 086
Foreign currency translation reserve -3 994 - -
Non-distributable reserve - 37 -292
Total Equity 38 563 49 210 47 087
LIABILITIES
Insurance contract provisions 4 131 4 184 5 187
Deferred tax liability 391 558 352
VAT tax payable 356 - 39
Dividends payable 349 234 215
Trade and other payables 1 548 1 095 2 301
Total Liabilities 6 775 6 071 8 094
Total shareholders' equity and liabilities 45 338 55 281 55 181
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE INCOME
6 Months Ended 6 Months Ended Year Ended
31-Mar-2018 31-Mar-2017 30-Sep-2017
Unaudited Unaudited Audited
R'000 R'000 R'000
Gross written premium 28 987 26 388 53 956
Less: reinsurance premium -611 -888 -1 847
Net premium written 28 376 25 500 52 109
Change in provision for gross unearned
-70 28 12
premiums
Net insurance premium earned 28 306 25 528 52 121
Other income 240 28 59
Investment income -2 169 2 331
Total income 28 544 25 725 54 511
Claims incurred, net of reinsurance -12 897 -12 626 -24 774
Gross claims incurred -12 851 -12 657 -24 763
Reinsurance recoveries -46 31 -11
Administration Expenses -8 716 -7 270 -15 467
Acquisition costs -2 048 -1 964 -3 924
Profit before taxation 4 883 3 865 10 346
Taxation -1 345 -1 022 -2 812
Total comprehensive income for the period 3 538 2 843 7 534
Other comprehensive income, net of tax
Items that may subsequently be reclassified to income:
Available for sale assets - 373 44
Exchange differences on foreign
-3 994 - -
operations
Total comprehensive income for the year -456 3 216 7 578
Profit attributable to:
- Equity holders of the parent -456 3 216 7 578
Earnings attributable to the equity
holders
Basic earnings per share (cents) 28.72 22.66 58.92
Diluted earnings per share (cents) 28.72 22.66 58.92
Dividends per share (cents)
- Ordinary shares 13.50 13.50 22.25
- "A" class preference shares 2.38 2.34 3.92
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN EQUITY
Share Foreign
Non-
capital Retained currency
distributable Total
and income translation
reserve
premium reserve
R'000 R'000 R'000 R'000 R'000
Balance at 30 September 2016
11 334 20 051 -336 - 31 049
Changes in Equity for the year ended
30 September 2017
Share issue (1 700 000 shares at
R10.00 each) 17 000 17 000
Profit for the year ended 30
September 2017 7 534 7 534
Movement in Items that may
subsequently be reclassified to
income: Available for sale assets 44 44
Dividend paid to shareholders -3 499 -3 499
Treasury shares purchased by
subsidiary -5 041 -5 041
Balance at 30 September 2017
23 293 24 086 -292 - 47 087
Changes in Equity for the 6 months ended 31
March 2018
Profit for the 6 months ended 31
March 2018 3 538 3 538
Cancellation of shares -315 -315
Dividend paid to shareholders -2 124 -2 124
Treasury shares purchased by
subsidiary -5 921 -5 921
Movement in Items that may
subsequently be reclassified to
income: Available for sale assets 292 292
Exchange differences on foreign
operations -3 994 -3 994
Balance at 31 March 2018
17 057 25 500 - -3 994 38 563
Balance as at 1 October 2016
11 334 20 051 -336 - 31 049
Changes in Equity for the 6 months
ended 31 March 2017
Profit for the 6 months ended 31
March 2017 2 843 2 843
Dividend paid to shareholders -1 847 -1 847
Movement in Items that may
subsequently be reclassified to
income: Available for sale assets 373 373
Share issue (1 700 000 shares at
R10.00 each) 17 000 17 000
Treasury shares purchased by
subsidiary -208 -208
Balance as at 31 March 2017
28 126 21 047 37 - 49 210
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS
6 Months 6 Months
Year ended
ended ended
31-Mar-2018 31-Mar-2017 30-Sep-2017
Unaudited Unaudited Audited
R'000 R'000 R'000
Cash generated/(utilised) by operations 3 205 2 180 9 388
Interest received 1 007 778 1 771
Dividend received 111 145 295
Taxation paid -1 380 -1 060 -3 027
Net cash from operating activities 2 943 2 043 8 427
Movement in Intangible assets -7 -327 -330
Movement in Fixed assets -294 -1 348 -1 477
Movement in equity investments -3 645 -15 900 5 356
Movement in loans receivable 22 20 -
Net cash used in investing activities -3 924 -17 555 3 549
Dividends paid to shareholders -1 990 -1 824 -3 495
Proceeds from issue of share capital - 17 000 17 000
Purchase of treasury shares -5 921 -208 -5 041
Share buy back -317 - -
Net cash used in financing activities -8 228 14 968 8 464
Net movement in cash and cash equivalents -9 209 -544 20 440
Effects of currency translation on cash and
cash equivalents -3 427 - -
Cash and cash equivalents at beginning of
the period 45 781 25 341 25 341
Cash and cash equivalents at end of the
period 33 145 24 797 45 781
EARNINGS PER SHARE
6 Months 6 Months
Year ended
ended ended
31-Mar-2018 31-Mar-2017 30-Sep-2017
Unaudited Unaudited Audited
Basic earnings per share (cents) 28.72 22.66 58.92
Diluted earnings per share (cents) 28.72 22.66 58.92
Headline earnings per share (cents) 30.76 24.05 59.70
Fully diluted headline earnings per share
30.76 24.05 59.70
(cents)
Number of shares
- in issue 13 060 632 13 105 632 13 105 632
- weighted average 12 321 050 12 546 251 12 786 823
The weighted average number of shares has been used in the calculations of earnings per
share, diluted earnings per share, headline earnings per share and fully diluted
headline earnings per share.
Reconciliation of net profit attributable to shareholders of the parent to headline
earnings
Net profit attributable to shareholders of the
3 538 3 216 7 534
parent (R'000)
Profit/Loss on sale of property and equipment
(R'000)
- Before tax - 29 29
- tax - -8 -8
Profit/Loss on sale of shares held as available
for sale assets(R'000)
- Before tax 349 212 108
- tax -97 -59 -30
Headline earnings 3 790 3 390 7 633
COMMENTS ON RESULTS
Indequity is delighted to announce that it has increased its basic earnings per
share by 26.7% when compared to the basic earnings per share reported in the previous
six-month period, from 22.66 cents for the six months ended 31 March 2017 to 28.72
cents per share for the six months ended 31 March 2018. It is noteworthy that in a
highly competitive marketplace, premiums increased by 10% and Indequity achieved a
net claims ratio of 44% (2017:48%) and therefore once again significantly
outperformed its industry sector peers. The decrease in the claims ratio bears
testimony to the discipline and patience exercised by the Group. Indequity will
continue to utilise its disciplined underwriting strategy to optimise the returns
of the Group. The Group continues to maintain a strategic hedge against possible
depreciation in the value of the Rand over the longer term and this has led to
investing a large portion of liquid company assets in US Dollar based investments.
In the period under review, this strategy translated into negative returns largely
as a result of the strengthening of the rand against the US dollar. The Group
continues to believe that this is a prudent strategy and will thus maintain a large
exposure to US Dollar investments. Furthermore, the Group brings to notice that it
has also directed significant cash resources towards its share buyback program during
the period under review. Indequity has always believed in having a rational and
unbending standard for measuring progress and its main objective remains to create
superior stakeholder wealth. We are thankful that the company has again achieved the
exceptional operational results that the stakeholders have become accustomed to.
ACCOUNTING POLICIES AND PREPARATIONS
The principal accounting policies applied in preparing the condensed interim
financial statements for the six months ended 31 March 2018 are in terms of
International Financial Reporting Standards (”IFRS”) and are consistent with those
of the annual financial statements for the year ended 30 September 2017. The interim
financial statements were prepared in accordance with and containing information
required by the recognition, measurement, presentation and disclosure requirements
of IFRS, IAS 34 - Interim Financial Reporting as well as the SAICA Financial Reporting
Guides as issued by the Accounting Practices Committee and Financial Reporting
Pronouncements as issued by the Financial Reporting Standards Council and in
compliance with the Listing Requirements of the JSE Limited and the Companies Act
(No.71 of 2008), as amended. The financial information has been prepared in
accordance with standards of IFRS that are currently effective. This may differ from
interpretive guidance from the International Financial Reporting Interpretation
Committee of International Accounting Standards Board. The condensed interim
financial statements have not been audited or reviewed by the Group’s auditors.
SEGMENT INFORMATION
No segment analysis has been prepared for the six months as the Group’s operations
are focused only on short-term insurance activities.
DIVIDENDS
The board has declared a interim dividend of 10.50 cents per Indequity ordinary
share ("Ordinary Share") (March 2017: 10.5 cents) and 1.84 cents per Indequity A
class preference share ("A Class Preference Share") (March 2017: 1.85 cents) for the
six months ended 31 March 2018, to all ordinary shareholders and A class preference
shareholders recorded in the books of Indequity at close of business on Friday, 25
May 2018. The group has a dividend cover of 2.37 times. The cash dividend timetable
is structured as follows: the declaration date is Wednesday, 25 April 2018. The last
day to trade cum-dividend in order to participate in the dividend is Tuesday, 22 May
2018. The shares commence trading ex-dividend from the commencement of business on
Wednesday, 23 May 2018 and the record date is Friday, 25 May 2018. The dividend is
to be paid on Monday, 28 May 2018. Share certificates will not be able to be
rematerialised or dematerialised between Wednesday, 23 May 2018 and Friday, 25 May
2018, both days inclusive.
- The dividend has been declared out of income reserves.
- The local dividend tax rate is (20%).
Ordinary share A Class Preference
dividend (cents Share dividend
per Ordinary (cents per A Class
Share) Preference Share)
Gross local dividend amount for ordinary
shareholders / A class preference 10.5 1.84
shareholders exempt from dividend tax
Local dividend withholding tax amount for
ordinary shareholders / A class preference 2.1 0.368
shareholders to pay the dividend tax
Net local dividend amount for ordinary
shareholders / A class preference 8.4 1.472
shareholders liable to pay the dividend tax
- Indequity's income tax reference number is 9887001718.
- The group has 13 060 632 Ordinary Shares, 14 870 000 A Class Preference
Shares and 11 669 680 B Class Preference Shares in issue on declaration
date.
- Both A Class Preference Shares and B Class Preference Shares are unlisted.
- Payment number eight.
- This interim report has not been audited or reviewed by the Group auditor.
- This report has been published on 25 April 2018.
ON BEHALF OF THE BOARD
L Jansen van Rensburg Chief Executive Officer
JF Zwarts Chairman
Directors: LJ van Rensburg, TE Vorster, JF Zwarts*, G Williamson*,
AV van Jaarsveldt* (British), (*non-executive)
Company secretary: WS de Vries
Transfer secretary: Link Market Services South Africa (Pty) Ltd
Sponsor: KPMG Services (Pty) Ltd
Registered address: First Floor, Cascade House, Constantia Office Park CNR
14th Avenue and Hendrik Potgieter Road Constantia Kloof
1709
Postal address: PO Box 5433 Weltevredenpark 1715
Telephone: (+27 11) 475 0816
Fax: (+27 11) 475 0877
Prepared By: B Payne CA(SA) (Group Financial Manager) under the
supervision of TE Vorster CA(SA) (Financial Director).
Date: 25/04/2018 04:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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